ACC 312 Lecture Notes - Lecture 14: Opportunity Cost, Financial Statement, Tax Shield
Document Summary
Chapter 14 decisions with contribution margin: special orders and outsourcing. Decision problems involving accounting data typically are specified in quantitative terms, i. e. profit maximization or cost optimization. The role of the managerial accountant is to present such quantitative information. Outsourcing part a saves us x amount of dollars. Closing the cleveland plant saves us x amount of dollars. However, qualitative characteristics of the alternatives can be just as important! Non-financial aspects of a decision can later have a large negative financial impact, i. e. poor employee morale, bad publicity driving away customers, etc. ). Making business decisions is not as easy as just comparing quantitative calculations. Let"s say an accountant calculates closing the cleveland plant saves the company ,000,000 a year. I might say that"s not worth the bad employee morale and bad press. The quantitative data and information of decisions is the relatively easy part. The qualitative aspects of the decision are what typically drags out the decision-making process.
